Driving Demand for Home Energy Improvements

The following article is excerpted from a report of a study done by Lawrence Berkeley National Laboratory with contributions from the Institute for Sustainable Communities and Green for All. The primary audiences for the report are policy makers and program designers—especially those who are relatively new to the field, such as those in the over 2,000 towns, cities, states, and regions that are recipients of American Recovery and Reinvestment Act funds for clean-energy programs.

The report synthesizes lessons learned from first-generation programs; highlights emerging best practices; and suggests approaches to use in designing, implementing, and evaluating these programs. The authors of the study examined 14 residential energy efficiency programs, conducted an extensive review of the literature, interviewed industry experts, and surveyed residential contractors to identify and synthesize these lessons.

Policy makers and program designers in the United States and abroad are deeply concerned with two interconnected questions. The first is how to scale up energy efficiency to a level that is commensurate with the energy and climate challenges we face. The second is how to realize the potential for energy savings that efficiency advocates have touted for decades. When policy makers ask what energy efficiency can do, the answers usually revolve around the technical and economic potential of energy efficiency. Rarely do they address the factor that matters most for changing energy usage in existing homes. That factor is the consumer. A growing literature is concerned with the behavioral aspects of energy consumption. We examine a narrower, related subject: How can millions of Americans be persuaded to spend time and money upgrading their homes to eliminate energy waste, avoid high utility bills, and spur the economy?

With hundreds of millions of public dollars flowing into incentives, workforce training, and other initiatives to support comprehensive home energy improvements, it makes sense to review the history of these programs and glean the best practices for encouraging homeowners to make these improvements. Looking across 30 years of energy efficiency programs that have targeted the residential market, we find that many of the same issues that confronted past program administrators are relevant today. How do we cost-effectively motivate customers to take action? Whom can we partner with to increase program participation? How do we get residential efficiency programs to increase in scale?

It is not enough to provide information; programs must sell something people want. High home energy use is not currently a pressing issue for many people.

While there is no proven formula—and while energy efficiency advocates have had only limited success to date with motivating large numbers of Americans to invest in comprehensive home energy improvements, especially if they are being asked to pay most of the cost—there is a rich and varied history of the experiences of efficiency program implementers that new programs can draw upon. Here are some of the lessons that the authors of this report have learned from those experiences.

Marketing and Outreach Lessons

It is not enough to provide information; programs must sell something people want. High home energy use is not currently a pressing issue for many people. Find a more appealing draw, such as health, comfort, energy security, competition, or community engagement to attract interest.

Time spent studying the target population is important. A blanket marketing campaign to reach everyone will probably be ineffective and expensive, especially at the start of a program. Find and target early adopters. Tailor messages to this audience. Demographics can help you to segment the market and select the best strategies, but you can also segment the market by personal values, interest in hot issues such as health concerns, or the likelihood of saving energy and money.

Partner with trusted messengers. Larger subsidies and more-voluminous mailings don' t necessarily win over more customers. Programs can and should have a local face, with buy-in from community leaders. Tapping trusted parties, such as local leaders and local organizations, builds upon existing relationships and networks.

Language is powerful. Avoid meaningless or negatively associated words like retrofit and audit. Use words and ways of communicating that tap into customers' existing mental frames. Encourage program staff and contractors to use specific vivid examples, personalize the material wherever possible, frame statements in terms of loss rather than gain, and induce homeowners to make a commitment.

Contractors are program ambassadors. The contractor, more than any other party, is the person sitting across the kitchen table making the final sales pitch to the homeowner. Therefore contractors are often the public face and primary sales force for the program. Most programs that do a lot of energy upgrades have worked closely with contractors. Conversely, contractors who make a poor first impression or do shoddy work reflect poorly on the program.

One touch is not enough. The advertising industry' s three-times convincer concept means that most people need to be exposed to a product message at least three times before they buy into it. Energy efficiency is an especially tough product—it can be expensive, and it can’t be readily touched, tasted, or seen—and that calls for a layered marketing and outreach approach that has a repeated impact on potential participants.

Program Design and Implementation Lessons

Make it easy, make it fast. Offer seamless, streamlined services—package incentives, minimize paperwork, and preapprove contractors. Give people fewer reasons to decide against making home improvements by making it simple.

Contractors should be full partners. Contractors are the key point of sale for home energy improvements. They already understand the traditional renovation and home improvement market, and they have access to customers who may initially just want to replace a furnace but may be open to other improvements. It’s imperative to design a program that contractors want to sell -— and convince them that the opportunity is worth the time and money it will take to get the appropriate training and equipment.

Rebates, financing, and other incentives do matter. Past energy efficiency program experience shows that incentives do motivate the choice to do home upgrades and can be extremely important in getting a program off the ground.

A well-qualified workforce and trustworthy work are vital. Promoting a program aggressively before contractors can handle the workload can lead to disgruntled customers. Solid performance builds trust with customers by reliably producing energy savings, and by improving the customer's health, safety, and comfort.

Persistence and consistency are valuable. It takes time for partnerships to take root, for word to reach consumers, and for contractors to respond to an opportunity. Consistent programs that last for more than a year or two can create a more robust market for home energy improvements; ephemeral programs can undermine trust.

Know success and failure by measuring them, and experiment to figure out what works. Designing for data collection and evaluation at the start allows for midstream adjustments, and better selection among strategies. It also enables you to recognize success when it arrives. It is important to test strategies before launching full-scale programs and to test a variety of strategies to learn what works.

In retrospect, many of these lessons seem obvious. Forge strong local partnerships. Find out what people care about. Speak their language. Sell something people want. Be trustworthy. But our case studies, interviews, and literature review also show that energy efficiency program staff and contractors are learning more about how behavioral and marketing insights can be applied to reduce energy use in the residential market. Success will require multifaceted approaches that are based on a deeper understanding of what motivates homeowners and contractors. Effective programs will be tailored to the location, thoughtfully researched and tested, and personalized to the target audience. They will also be more labor intensive than simple incentive programs. Just as there is no single, monolithic customer, there is no one way to drive demand for home energy improvement -- but past experience and research offer policy makers and program designers a strong foundation on which to build.

This article is excerpted from a report based on a study that was funded by the DOE Office of Energy Efficiency and Renewable Energy Weatherization and Intergovernmental program. Principal authors of the report are Merrian C. Fuller, Cathy Kunkel, Mark Zimring, Ian Hoffman, and Charles Goldman of Lawrence Berkeley National Laboratory. Katie Lindgren Soroye was a consultant on this project. She currently works for Pacific Gas & Electric Company.

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